Flywire (FLYW): Margin Resilience and Strategic Expansion Create Compelling Value

Flywire (FLYW) has delivered a Q1 2025 performance that underscores its transition from a payments processor to a high-margin, vertically focused financial technology leader. With revenue up 17% year-over-year to $133.5 million and adjusted EBITDA margins expanding +476 basis points to 16.8%, the company is proving its ability to navigate macroeconomic headwinds through operational discipline and strategic bets. Combined with a 2.3x forward sales multiple—a fraction of its peers’ valuations—and a disciplined capital allocation strategy, Flywire presents a rare opportunity to buy a high-growth, margin-improving fintech at a bargain price.

The Margin Story: Cost Control Meets Recurring Revenue

The most compelling aspect of Flywire’s Q1 results is its margin resilience. Despite headwinds like currency volatility and a slower global economy, adjusted EBITDA jumped to $21.6 million, a 64% year-over-year increase, while margins hit 16.8%—a level that would have been even higher without Sertifi’s recent acquisition. The company’s focus on cost optimization—including $49 million in share repurchases and a relentless push to reduce operational redundancies—has positioned it to scale margins further.

Critically, Flywire’s business model is highly recurring, with clients in education, travel, and healthcare sectors generating predictable revenue streams. Its low client churn (<5% in core verticals) and the addition of over 200 new clients in Q1 highlight the stickiness of its software-driven payment solutions. This recurring revenue base, paired with a $57 million remaining buyback program, creates a flywheel effect: margin expansion fuels cash generation, which funds further share repurchases, lifting per-share value.

Geographic Diversification: From India to Scandinavia

Flywire’s growth isn’t just a U.S. story. Its global expansion into high-potential markets is a key catalyst for future revenue. In India—a market with over 600 million millennials—the company has partnered with Avanse, the second-largest non-banking financial company, and State Bank of India, the country’s largest public-sector bank. These deals open access to education loan payment volumes, a segment Flywire dominates in the U.S.

Similarly, in Scandinavia, Flywire’s acquisition of Sertifi has enabled it to tap into Haman Group, Scandinavia’s largest inbound tour operator, boosting its travel vertical. In Europe, Sertifi’s hotel booking integrations are scaling rapidly, with Flywire now processing payments for major hotel chains.

This diversification isn’t just about scale—it’s about lowering risk. With over 4,600 clients across 250 countries, Flywire is insulated from regional economic slowdowns. The $8.4 billion TPV (total payment volume) in Q1, up 20.4% year-over-year, is a testament to its ability to grow even as some verticals face headwinds.

Sertifi: The Hidden Margin Driver

The Sertifi acquisition, finalized in February 2025, is often overlooked but central to Flywire’s margin story. Sertifi’s software platform automates payment reconciliation for hotels, travel agencies, and healthcare providers—a process that historically required costly manual labor. By integrating Sertifi’s technology into Flywire’s existing systems, the company is eliminating inefficiencies and capturing recurring revenue from clients that previously paid for separate solutions.

Sertifi contributed $4.7 million in Q1 revenue and is projected to add $35-40 million in FY 2025. But its value isn’t just top-line: its integration into Flywire’s ERP partnerships (e.g., Ellucian, Workday) allows for higher gross margins. The company’s Q1 non-GAAP revenue (excluding Sertifi) grew just 12.6%, while Sertifi’s higher-margin software solutions are driving the overall margin expansion.

Valuation: A 2.3x Multiple on a Margin-Improving Fintech?

At a forward sales multiple of 2.3x, Flywire is priced as if it’s a shrinking business—a stark misreading of its trajectory. For context, Square (now Block) traded at 4.5x sales during its high-growth phase, while PayPal historically traded at 6-8x sales. Flywire’s margins are improving, its top line is growing 17-23% annually, and its Sertifi integration is unlocking a $35-40 million tailwind—all for a price tag that implies stagnation.

Even more compelling: management has guided for +100-300 bps margin expansion in 2025, with Q2 margins expected to grow +150-350 bps YoY. This suggests Flywire is on track to hit mid-20% EBITDA margins by year-end, a level that could re-rate its valuation meaningfully.

Catalysts to Watch: Travel and Education’s Turnaround

Two verticals will drive Flywire’s next phase of growth: travel and education.

1. Travel: Sertifi’s hotel and tour operator partnerships are still early-stage. With global travel volumes rebounding post-pandemic and Flywire’s ability to reduce payment reconciliation costs by 30-50%, this vertical could see explosive growth.
2. Education: Flywire’s dominance in tuition payments—processing $2 billion in 529 plans for 750 U.S. institutions—is a moated business. International expansion (e.g., India’s education loans) adds another leg.

Both sectors are high-margin and recurring, meaning Flywire can scale margins even as revenue grows.

Risks and Why They’re Overblown

Critics point to macro risks: currency headwinds, tax law changes, and client concentration. But Flywire has already hedged against many of these:
- Currency: It processes payments in 140 currencies, reducing exposure to any single market’s volatility.
- Tax: Guidance already accounts for potential tax impacts.
- Clients: No single client accounts for >5% of revenue; diversification mitigates concentration risk.

Conclusion: Buy Now, Reap Later

Flywire is a margin-rebounding, valuation-crushed fintech with a clear path to $1.2 billion+ in annual revenue and mid-20% EBITDA margins. At 2.3x sales, it’s priced for disaster—but the data shows the opposite.

Investors should act now: buy FLYW. The stock is a rare blend of growth, margin upside, and valuation discounts, and it won’t stay this cheap for long.